Business News
technotrans back into calmer waters
Tuesday 11. August 2009 - downturn has leveled off significantly / operating profit for Q2 at 20.5 million revenue / second half expected on similar level as first half / benefit from capacity adjustments in US and Gersthofen in 2010
Following the dramatic slump in revenue in the first quarter of the 2009 financial year, technotrans has now steered itself back into rather calmer waters. While revenue for the technotrans Group nosedived dramatically from 36.1 million (4th quarter of 2008) to 23.2 million in the first quarter, 20.5 million in revenue was generated in the second quarter of 2009. As expected, the extent of the downturn has therefore leveled off somewhat, with the rate of decrease of -38.2 percent of a similar magnitude to the first quarter. The first half of the year closed with revenue of 43.7 million, compared with 70.7 million in the previous year. The Technology segment remains particularly badly affected, having experienced virtually a halving of its revenue year on year. On the other hand the Services segment experienced a comparatively mild retreat in the first six months.
The package of measures that have been implemented since the second half of 2008 have helped to cope with the drastic fall in revenue. Nevertheless, the downturn has naturally not left technotrans earnings figures unscathed. A loss (EBIT) of 1.1 million is reported for the second quarter (previous year: profit of 1.8 million); the figure at the end of the first quarter was -0.9 million. Disregarding the restructuring costs necessitated primarily by the transfer of manufacturing activities from the USA and Gersthofen to Sassenberg, the operating result for the quarter would have been virtually in the balance, based on revenue of 20.5 million.
After interest and taxes, there remains a loss of 2.5 million for the first half. This corresponds to earnings per share, for shares outstanding, of 0.41 (previous year +0.41).
At June 30, the group numbered 681 employees, compared with 823 one year earlier (excluding temporary workers). The measures initiated to reduce capacity had made better progress than originally planned by the middle of 2009. Short-time is currently securing the jobs of over 90 employees, who will be needed by the company for the post-recession phase.
The Segments
Half way through the year, the Technology segment is still feeling the impact of the fall in business volume for the international printing industry. Revenue after six months reached only 26.2 million, a drop of 49.4 percent. Compared with 14.2 million in the first quarter, the downturn in revenue eased somewhat but was still marginally less than 12.0 million (previous year 23.8 million, -49.7 percent).
The lower volume of business again had a marked impact on the result for the segment in the second quarter. Following on from a loss of 2.1 million in the first quarter, the second quarter added a further -2.3 million. This figure nevertheless by and large includes the restructuring costs for consolidating the production capacity, with the result that these figures can be considered to be a step in the right direction in operating terms, too.
First-half revenue for the Services segment of 17.5 million did not quite match the prior-year level ( 18.9 million, -7.3 percent). This development is due to some extent to the fall in new installations from project business, but the global document solutions (gds) business unit likewise only just about achieved its original business target.
The margin for the segment compared with the first quarter was virtually unchanged at 12.4 percent. In absolute terms, this too represented a downturn of 21.6 percent at the half-way point compared with the prior-year period, from 2.8 million to 2.2 million. Specifically at a time of such economic weakness, the segment has nevertheless demonstrated its capacity to stabilise business as a whole.
Financial position
After a good start to the new year, cash flow again developed highly satisfactorily in the second quarter. Predominantly thanks to the further optimised working capital, net cash from operating activities reached 6.5 million after six months (previous year 2.7 million). The reduced investment volume also helped to increase the free cash flow to 5.6 million (previous year -1.6 million).
Cash and cash equivalents consequently grew by 4.2 million to 11.2 million at the end of the first half (end of 2008: 6.9 million). As planned, therefore, technotrans is in a position to finance operations from within, without needing recourse to additional borrowed capital in the current sales crisis.
Outlook
“At present, we believe there are as yet no signs of a sustained recovery in the global economy, the German mechanical engineering sector or the printing industry,” Henry Brickenkamp, Spokesman of the Board of Management of technotrans AG, comments on the underlying situation of the company. “We do not see any significant improvement in the order books of printing press manufacturers and we do not expect this situation to improve over the coming months. We therefore forecast a similar revenue level for the second half of the year as in the first half; the third quarter of 2009 is likely to be the weakest because of our customers remaining closed for extended periods. On the other hand we expect to see a very tentative recovery in the fourth quarter due to a catch-up effect, coupled with the fact that the process of reducing inventories by our major customers will have reached an advanced stage by then.”
Dirk Engel, CFO of technotrans AG, specifies: “These assumptions regarding the short-term development of our business largely tally with our scenario of revenue amounting to 85 to 95 million for 2009, with the actual figure more likely to be towards the lower rather than upper end of this range.” The measures that the management has taken to stabilise and optimise profitability are progressing according to plan, as reflected in particular by the operating figures for the second quarter. “This is an indication that we are on the right track,” Engel says. “We therefore expect just about to meet our target of finishing 2009 with an operating profit, based on revenue around 60 million lower than in the previous year, but before the cost of restructuring is taken into account. We believe that all the steps we have taken towards further consolidation are both important and necessary and we will be able to benefit fully from the cost savings in 2010.”
In addition, the Board of Management has decided to hive off the global document solutions (gds) business unit shortly in order to promote its independent identity in the marketplace. The “new” company, which will in future profile itself as an independent service provider for technical documentation and a supplier of software products for all aspects of documentation, will target further growth and help to gradually extend technotrans range of activities beyond the printing industry.